Pricing and greenness investment for green products with government subsidies: when to apply blockchain technology?

Abstract Green products have received increasing attention by firms and consumers in recent years, but consumers are often uncertain about the valuation of green products. To solve this problem, many firms have utilized blockchain technology to provide transparent and traceable information for their products. This study examines optimal strategies for pricing and ‘greenness’ investment for green products with government subsidies and explores the conditions for adopting blockchain technology. First, we find that both retailers and consumers always benefit from a manufacturer’s adoption of blockchain technology. When the blockchain’s operational cost is small or the consumer valuation uncertainty is high, the social welfare outcome will be positive after the adoption of blockchain technology. Second, although blockchain can reduce the valuation uncertainty for consumers, the demand in the blockchain-supported supply chain is not always higher than that in the traditional supply chain. In addition, when a government subsidizes either the manufacturer or the consumer, adopting blockchain is still profitable for the manufacturer even if the operational cost of blockchain technology is relatively large. However, the result is quite different when the government subsidizes the retailer. In the retailer subsidy program, the manufacturer’s adoption of blockchain technology hinges on the level of consumer valuation uncertainty.